CITY OF COMMERCE, Calif.,
Nov. 9, 2011 /PRNewswire/ --
99 Cents Only Stores® (NYSE: NDN)
(the "Company") announced its financial results for the second
quarter ended October 1, 2011.
(Logo:
http://photos.prnewswire.com/prnh/20110214/LA47195LOGO-a)
Highlights for the second quarter of fiscal 2012 compared to the
second quarter of fiscal 2011:
- Retail sales for the Company's consolidated operations
increased by 9.0% to $352.2 million
and same-store sales increased 6.7%
- Consolidated gross margin decreased by 60 basis points to 40.2%
of sales
- Product cost increased by 70 basis points to 57.4%
- Shrinkage was lower by 20 basis points at 2.2%
- Other items in cost of sales increased by 10 basis points to
0.3%
- Consolidated operating expenses decreased by 100 basis points
to 31.5% of sales
- Retail operating costs decreased 140 basis points to 22.4%
- Distribution and transportation costs decreased 20 basis points
to 4.8%
- Corporate G&A costs increased 30 basis points to 3.6%
- Other operating expenses increased 30 basis points to 0.7%
which included a negative impact of $1.1
million or 30 basis points of professional fees related to
the going private transaction
- Consolidated Income Before Taxes increased to $24.4 million, or 6.7% of revenues, from
$20.8 million, or 6.2% of revenues,
in the prior year
- Consolidated net income increased by $2.2 million to $15.1
million or $0.21 per diluted
share, versus $12.9 million in the
prior year, or $0.18 per diluted
share
Eric Schiffer, CEO of
99 Cents Only Stores®, stated, "We
are pleased with our financial results for the second quarter of
fiscal 2012. Our long-term operational improvement initiatives have
continued to meet our expectations, resulting in earnings per share
of $0.21 for the second quarter of
fiscal 2012. We look forward to further discussing our
results on today's earnings release conference call."
The details for participating in today's conference call can be
found following the financial discussion.
CONSOLIDATED RESULTS
Net consolidated sales for the second quarter of fiscal 2012
were $363.0 million, an 8.8% increase
compared to net sales of $333.6
million for the second quarter of fiscal 2011. Retail
sales for the Company's consolidated operations increased by 9.0%
to $352.2 million. Same-store sales
calculated on a comparable 13-week period increased 6.7%.
Consolidated gross profit for the second quarter of fiscal 2012
was $145.8 million, compared to
$136.1 million for the second quarter
of the prior fiscal year. The Company's consolidated gross
profit margin was 40.2% for the second quarter of fiscal 2012
versus 40.8% for the second quarter of the prior fiscal year. The
decrease in gross profit margin was primarily due to an increase in
cost of products sold to 57.4% of net sales in the second quarter
of fiscal 2012 from 56.7% of net sales in the second quarter of
fiscal 2011 that was primarily attributable to merchandise price
increases and a shift in product mix. Freight costs also increased
20 basis points in the second quarter of fiscal 2012. These
unfavorable variances were offset by decreases in shrinkage to 2.2%
of net sales in the second quarter of fiscal 2012 from 2.4% of net
sales in the second quarter of fiscal 2011, and other less
significant items included in cost of sales.
Operating expenses were $114.4
million, or 31.5% of consolidated sales, for the fiscal 2012
second quarter versus $108.3 million,
or 32.5% of sales, for the second quarter of the prior fiscal year.
The Company's improved operating expense ratio is primarily
due to lower payroll-related expenses as a result of improvement in
store labor productivity, which was partially offset by an increase
in legal accruals of approximately $1.8
million for estimated future payments for settlement of
litigation and professional fees of approximately $1.1 million pertaining to the going private
transaction and the related process.
Consolidated operating income for the second quarter of fiscal
2012 was $24.4 million, compared to
$20.7 million for the second quarter
of fiscal 2011. Operating income as a percentage of net sales
was 6.7% in fiscal 2012 compared to 6.2% in fiscal 2011.
Net income for the second quarter of fiscal 2012 increased to
$15.1 million, or $0.21 per diluted share, compared to net income
of $12.9 million, or $0.18 per diluted share, for the second quarter
of fiscal 2011.
Certain additional categories of expense and other information
are summarized in Management's Analysis of Second Quarter
Consolidated Income Statement provided in Table 1 following the
financial statements for the quarter. This information and
other material information will be provided in the Company's Form
10-Q for the period ended October 1,
2011 and investors are encouraged to review the complete
Form 10-Q in conjunction with this release.
OUTLOOK
The Company believes that revenue growth in the remainder of
fiscal 2012 will primarily result from increases in same-store
sales, the full-year effect of stores opened since last year, and
new store openings. For fiscal 2012, as previously announced, the
Company has raised its same-store-sales percentage increase
expectations for the full year to mid-single digits and plans to
open 12 stores in the second half of the year. Of these 12
new stores, the Company has already opened one store in the third
quarter and plans to open two more stores in the third quarter and
approximately nine stores in the fourth quarter of fiscal 2012.
The majority of these new store openings in fiscal 2012 will
be in California. The Company
plans to accelerate its store growth rate to approximately 10% in
fiscal 2013, with the majority of new stores expected to be in
California.
CASH AND LIQUIDITY
As of the end of the second quarter of fiscal 2012, the Company
held $222.7 million in cash and short
and long-term marketable securities, and had no debt. The
Company's inventories at the end of the second quarter of fiscal
2012 were $233.2 million versus
$197.0 million at the end of second
quarter of fiscal 2011. The increase in inventories was primarily
due to early receipts of seasonal items, opportunistic buys and to
drive higher seasonal sales.
CONFERENCE CALL DETAILS
The Company's conference call to discuss its fiscal 2012 second
quarter and the other matters described in this release is
scheduled for today, Wednesday, November 9,
2011 at 1:30 p.m. Pacific
Time. You can participate in the live call by dialing
(888) 771-4371 from the U.S.A. and
(847) 585-4405 from international locations and entering
confirmation code 30971818. Please phone in approximately 9
minutes before the call is scheduled to begin and hold for a
Conference Plus operator to assist you. Please inform the
operator that you are calling in for 99
Cents Only Stores' second quarter fiscal 2012 earnings
release conference call, and be prepared to provide the operator
with your name, company name, and position if requested. A
telephone replay will be available approximately two hours after
the call concludes and will be available through Wednesday, November 23, 2011, by dialing (888)
843-7419 from the United States,
or (630) 652-3042 from international locations, and entering
confirmation code 30971818.
A copy of this earnings release and any other financial and
statistical information about the period to be presented in the
conference call will be available prior to the call at the section
of the Company's website entitled "Investor Relations" at
www.99only.com.
|
99 CENTS
ONLY STORES
CONSOLIDATED
BALANCE SHEETS
(In
thousands, except share data)
|
|
|
|
|
October 1,
2011
|
April
2,
2011
|
|
|
(Unaudited)
|
|
|
|
ASSETS
|
|
|
|
|
Current Assets:
|
|
|
|
|
Cash
|
$
24,684
|
$
16,723
|
|
|
Short-term
investments
|
189,644
|
184,929
|
|
|
Accounts receivable, net
of allowance for doubtful accounts of $252 and $258 at October 1,
2011 and April 2, 2011, respectively
|
2,491
|
1,655
|
|
|
Income taxes
receivable
|
3,406
|
15,901
|
|
|
Deferred income
taxes
|
30,049
|
30,049
|
|
|
Inventories,
net
|
233,173
|
191,535
|
|
|
Other
|
10,966
|
11,213
|
|
|
|
|
|
|
Total current
assets
|
494,413
|
452,005
|
|
|
Property and equipment,
net
|
322,792
|
313,852
|
|
|
Long-term deferred income
taxes
|
23,932
|
24,608
|
|
|
Long-term investments in
marketable securities
|
8,350
|
11,232
|
|
|
Assets held for sale
|
7,356
|
7,356
|
|
|
Deposits and other
assets
|
15,649
|
15,162
|
|
|
|
|
|
|
Total assets
|
$
872,492
|
$ 824,215
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS'
EQUITY
|
|
|
|
|
Current Liabilities:
|
|
|
|
|
Accounts
payable
|
$ 52,824
|
$ 45,163
|
|
|
Payroll and
payroll-related
|
15,231
|
15,598
|
|
|
Sales tax
|
7,490
|
6,544
|
|
|
Other accrued
expenses
|
24,379
|
18,881
|
|
|
Workers'
compensation
|
40,261
|
42,430
|
|
|
Current portion of capital
lease obligation
|
74
|
75
|
|
|
|
|
|
|
Total current
liabilities
|
140,259
|
128,691
|
|
|
Deferred rent
|
9,792
|
8,678
|
|
|
Deferred compensation
liability
|
4,244
|
4,924
|
|
|
Capital lease obligation, net of
current portion
|
393
|
373
|
|
|
|
|
|
|
Total
liabilities
|
154,688
|
142,666
|
|
|
|
|
|
|
Commitments and
contingencies
|
|
|
|
|
Shareholders' Equity:
|
|
|
|
|
Preferred stock, no par
value – authorized, 1,000,000 shares; no shares issued or
outstanding
|
—
|
—
|
|
|
Common stock, no par value
– authorized, 200,000,000 shares; issued and outstanding,
70,584,970 shares at October 1, 2011 and 70,327,068 shares at April
2, 2011
|
256,653
|
253,039
|
|
|
Retained
earnings
|
461,633
|
428,836
|
|
|
Other comprehensive
loss
|
(482)
|
(326)
|
|
|
|
|
|
|
Total shareholders'
equity
|
717,804
|
681,549
|
|
|
|
|
|
|
Total liabilities and
shareholders' equity
|
$ 872,492
|
$ 824,215
|
|
|
|
|
|
|
|
|
|
|
|
99 CENTS
ONLY STORES
CONSOLIDATED
STATEMENTS OF INCOME
(In
thousands, except per share data)
(Unaudited)
|
|
|
|
|
For the
Second Quarter Ended
|
For the
First Half Ended
|
|
|
October 1,
2011
|
September
25, 2010
|
October 1,
2011
|
September
25, 2010
|
|
|
Net Sales:
|
|
|
|
|
|
|
99 Cents Only Stores
|
$
352,220
|
$
323,248
|
$
709,764
|
$
659,802
|
|
|
Bargain Wholesale
|
10,818
|
10,311
|
21,614
|
20,232
|
|
|
|
|
|
|
|
|
Total sales
|
363,038
|
333,559
|
731,378
|
680,034
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
sales (excluding depreciation and amortization expense shown
separately below)
|
217,264
|
197,488
|
436,784
|
403,701
|
|
|
Gross profit
|
145,774
|
136,071
|
294,594
|
276,333
|
|
|
Selling, general and
administrative expenses:
|
|
|
|
|
|
|
Operating
expenses
|
114,367
|
108,254
|
227,933
|
215,304
|
|
|
Depreciation and
amortization
|
6,990
|
7,109
|
13,703
|
13,501
|
|
|
|
|
|
|
|
|
Total selling, general and
administrative expenses
|
121,357
|
115,363
|
241,636
|
228,805
|
|
|
|
|
|
|
|
|
Operating income
|
24,417
|
20,708
|
52,958
|
47,528
|
|
|
|
|
|
|
|
|
Other (income)
expense:
|
|
|
|
|
|
|
Interest income
|
(60)
|
(207)
|
(202)
|
(441)
|
|
|
Interest
expense
|
34
|
10
|
335
|
11
|
|
|
Other-than-temporary
investment impairment due to credit losses
|
31
|
112
|
31
|
112
|
|
|
Other
|
(19)
|
(5)
|
(62)
|
(14)
|
|
|
|
|
|
|
|
|
Total other (income)
expense, net
|
(14)
|
(90)
|
102
|
(332)
|
|
|
|
|
|
|
|
|
Income before provision for income taxes
|
24,431
|
20,798
|
52,856
|
47,860
|
|
|
Provision for income
taxes
|
9,317
|
7,862
|
20,059
|
18,110
|
|
|
|
|
|
|
|
|
Net income
|
$
15,114
|
$
12,936
|
$
32,797
|
$
29,750
|
|
|
|
|
|
|
|
|
Earnings per common
share:
|
|
|
|
|
|
|
Basic
|
$
0.21
|
$
0.19
|
$
0.46
|
$
0.43
|
|
|
|
|
|
|
|
|
Diluted
|
$
0.21
|
$
0.18
|
$
0.46
|
$
0.42
|
|
|
|
|
|
|
|
|
Weighted average number of
common shares outstanding:
|
|
|
|
|
|
|
Basic
|
70,570
|
69,882
|
70,517
|
69,768
|
|
|
|
|
|
|
|
|
Diluted
|
71,334
|
70,972
|
71,333
|
70,574
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
99 CENTS
ONLY STORES
CONSOLIDATED
STATEMENTS OF CASH FLOWS
(Amounts in
thousands)
(Unaudited)
|
|
|
|
|
First
Half Ended
|
|
|
October 1,
2011
|
September
25,
2010
|
|
|
Cash flows from operating
activities:
|
|
|
|
|
Net income
|
$
32,797
|
$
29,750
|
|
|
Adjustments to reconcile
net income to net cash provided by operating activities:
|
|
|
|
|
Depreciation and
amortization
|
13,703
|
13,501
|
|
|
Loss on disposal of fixed
assets
|
80
|
131
|
|
|
Investments
impairment
|
31
|
112
|
|
|
Excess tax benefit from
share-based payment arrangements
|
(584)
|
(696)
|
|
|
Deferred income
taxes
|
(105)
|
32
|
|
|
Stock-based compensation
expense
|
1,313
|
1,502
|
|
|
Changes in assets and
liabilities associated with operating activities:
|
|
|
|
|
Accounts
receivable
|
(836)
|
290
|
|
|
Inventories
|
(42,641)
|
(25,882)
|
|
|
Deposits and other
assets
|
165
|
(182)
|
|
|
Accounts
payable
|
8,498
|
5,287
|
|
|
Accrued
expenses
|
7,600
|
407
|
|
|
Accrued workers'
compensation
|
(2,169)
|
(2,135)
|
|
|
Income taxes
|
12,495
|
(6,737)
|
|
|
Deferred rent
|
1,114
|
(8)
|
|
|
Other long-term
liabilities
|
—
|
(108)
|
|
|
|
|
|
|
Net cash provided by
operating activities
|
31,461
|
15,264
|
|
|
|
|
|
|
Cash flows from investing
activities:
|
|
|
|
|
Purchases of property and
equipment
|
(23,553)
|
(15,547)
|
|
|
Proceeds from sale of
fixed assets
|
2
|
57
|
|
|
Purchases of
investments
|
(50,389)
|
(40,222)
|
|
|
Sales of
investments
|
48,174
|
32,038
|
|
|
|
|
|
|
Net cash used in investing
activities
|
(25,766)
|
(23,674)
|
|
|
|
|
|
|
Cash flows from financing
activities:
|
|
|
|
|
Repurchases of common
stock related to issuance of performance stock units
|
(753)
|
(735)
|
|
|
Payments of capital lease
obligation
|
(35)
|
(34)
|
|
|
Proceeds from exercise of
stock options
|
2,470
|
2,498
|
|
|
Excess tax benefit from
share-based payment arrangements
|
584
|
696
|
|
|
|
|
|
|
Net cash provided by
financing activities
|
2,266
|
2,425
|
|
|
|
|
|
|
Net increase (decrease) in
cash
|
7,961
|
(5,985)
|
|
|
Cash and cash equivalents -
beginning of period
|
16,723
|
19,877
|
|
|
|
|
|
|
Cash and cash equivalents - end
of period
|
$
24,684
|
$
13,892
|
|
|
|
|
|
|
|
|
|
|
|
|
|
99 CENTS
ONLY STORES
|
|
|
Management
Analysis of Second Quarter Fiscal 2012 and 2011 Consolidated Income
Statement
|
|
|
TABLE
1
|
|
|
Description
|
|
Consolidated
|
|
Consolidated
|
|
|
|
|
Q2
|
|
|
Q2
|
|
|
|
($
millions)(3)
|
|
FY2012
|
%
Sales
|
|
FY2011
|
%
Sales
|
|
|
Revenues
|
|
(unaudited)
|
|
|
(unaudited)
|
|
|
|
Retail
|
|
$352.2
|
97.0%
|
|
$323.2
|
96.9%
|
|
|
Bargain Wholesale
|
|
$10.8
|
3.0%
|
|
$10.3
|
3.1%
|
|
|
Total
|
|
$363.0
|
100.0%
|
|
$333.6
|
100.0%
|
|
|
|
|
|
|
|
|
|
|
|
Cost of Goods
Sold
|
|
|
|
|
|
|
|
|
Purchase Cost
|
|
$208.3
|
57.4%
|
|
$189.0
|
56.7%
|
|
|
Shrinkage (1)
|
|
$7.9
|
2.2%
|
|
$7.9
|
2.4%
|
|
|
Other
|
|
$1.1
|
0.3%
|
|
$0.7
|
0.2%
|
|
|
Total Cost of Goods
Sold
|
|
$217.3
|
59.8%
|
|
$197.5
|
59.2%
|
|
|
|
|
|
|
|
|
|
|
|
Gross Margin
|
|
$145.8
|
40.2%
|
|
$136.1
|
40.8%
|
|
|
|
|
|
|
|
|
|
|
|
Selling, General and
Administrative Expenses
|
|
|
|
|
|
|
|
|
Retail Operating
|
|
$81.5
|
22.4%
|
|
$79.3
|
23.8%
|
|
|
Distribution and
Transportation
|
|
$17.5
|
4.8%
|
|
$16.7
|
5.0%
|
|
|
Corporate G&A
|
|
$13.0
|
3.6%
|
|
$11.0
|
3.3%
|
|
|
Other (incl. Stock-comp and
professional fees related to going private) (2)
|
|
$2.4
|
0.7%
|
|
$1.2
|
0.4%
|
|
|
Operating Expenses
|
|
$114.4
|
31.5%
|
|
$108.3
|
32.5%
|
|
|
Depreciation &
Amortization
|
|
$7.0
|
1.9%
|
|
$7.1
|
2.1%
|
|
|
Total Operating
Expenses
|
|
$121.4
|
33.4%
|
|
$115.4
|
34.6%
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
$24.4
|
6.7%
|
|
$20.7
|
6.2%
|
|
|
|
|
|
|
|
|
|
|
|
Other (Income)
Expense
|
|
($0.0)
|
0.0%
|
|
($0.1)
|
0.0%
|
|
|
|
|
|
|
|
|
|
|
|
Income before provision for
income taxes
|
|
$24.4
|
6.7%
|
|
$20.8
|
6.2%
|
|
|
|
|
|
|
|
|
|
|
|
Provision for Income
Taxes
|
|
$9.3
|
2.6%
|
|
$7.9
|
2.4%
|
|
|
|
|
|
|
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Net income
|
|
$15.1
|
4.2%
|
|
$12.9
|
3.9%
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EPS
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|
|
|
|
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|
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Basic
|
|
$0.21
|
|
|
$0.19
|
|
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Diluted
|
|
$0.21
|
|
|
$0.18
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|
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|
Shares
Outstanding
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|
|
|
|
|
|
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Basic
|
|
70,570
|
|
|
69,882
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|
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Diluted
|
|
71,334
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|
|
70,972
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(1)
|
Shrinkage includes scrap, shrink
and excess and obsolete inventory.
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(2)
|
Other SG&A includes
stock-based compensation and SG&A for the Bargain Wholesale
division for second quarter of fiscal 2012 and 2011.
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|
In addition, second quarter of
fiscal 2012 included $1.1 million of professional fees related to
the going private transaction and the related process.
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(3)
|
Dollar amounts and percentages
may not add up due to rounding.
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Founded in 1982, 99 Cents Only
Stores® operates 289 extreme value retail stores with 214 in
California, 35 in Texas, 27 in Arizona and 13 in Nevada. The Company's next store grand opening
is Thursday November 10th in
Sugar Land, Texas. 99 Cents Only Stores® emphasizes quality
name-brand consumables, priced at an excellent value, in
convenient, attractively merchandised stores. Over half of the
Company's sales come from food and beverages, including produce,
dairy, deli and frozen foods, along with organic and gourmet foods.
The Company's New York Stock Exchange symbol is NDN.
Safe Harbor Statement
We have included statements in this release that constitute
"forward-looking statements" within the meaning of Section 21E of
the Securities Exchange Act and Section 27A of the Securities Act.
The words "expect," "estimate," "anticipate," "plan," "predict,"
"believe" and similar expressions and variations thereof are
intended to identify forward-looking statements. Such statements
appear in this release and include statements regarding the intent,
belief or current expectations of the Company, its directors or
officers with respect to, among other things, the results of
operations for fiscal 2012, the business and growth strategies of
the Company, planned new store openings, our future store opening
growth rate and trends affecting the financial condition or results
of operations of the Company. The shareholders of the Company and
other readers are cautioned not to put undue reliance on such
forward-looking statements. Such forward-looking statements are not
guarantees of future performance and involve risks and
uncertainties, and actual results may differ materially from those
projected in this release for the reasons, among others, discussed
in the reports and other documents the Company files from time to
time with the Securities and Exchange Commission, including the
risk factors contained in the Section – "Management's Discussion
and Analysis of Financial Condition and Results of Operations" of
the Company's Annual Reports on Form 10-K and Quarterly Reports on
Form 10-Q. The Company undertakes no obligation to publicly revise
these forward-looking statements to reflect events or circumstances
that arise after the date hereof.
Contact Angela Thurstan,
323-881-1272.
SOURCE 99 Cents Only Stores